A rate which meets all of the conditions of Sec. 548.2 and which in
addition satisfies all the conditions set forth in one of the following
paragraphs will be regarded as being substantially equivalent to the
average hourly earnings of the employee, exclusive of overtime premiums,
in the particular work over a representative period of time and may be
used in computing overtime compensation for purposes of section 7(g)(3)
of the Act, and Sec. 548.2:
(a) A rate per hour which is obtained by dividing a monthly or semi-
monthly salary by the number of regular working days in each monthly or
semi-monthly period and then by the number or hours in the normal or
regular workday. Such a rate may be used to compute overtime
compensation for all the overtime hours worked by the employee during
the monthly or semimonthly period for which the salary is paid.
(b) A rate per hour which is obtained by averaging the earnings,
exclusive of payments described in paragraphs (1) through (7) of section
7(e) of the Act, of the employee for all work performed during the
workday or any other longer period not exceeding sixteen calendar days
for which such average is regularly computed under the agreement or
understanding. Such a rate may be used to compute overtime compensation
for all the overtime hours worked by the employee during the particular
period for which the earnings average is computed.
(c) A rate per hour which is obtained by averaging the earnings,
exclusive of payments described in paragraphs (1) through (7) of section
7(e) of the Act, of the employee for each type of work performed during
each workweek, or any other longer period not exceeding sixteen calendar
days, for which such average is regularly computed under the agreement
or understanding. Such a rate may be used to compute overtime
compensation, during the particular period for which such average is
computed, for all the overtime hours worked by the employee at the type
of work for which the rate is obtained.
(d) The rate or rates which may be used under the Act to compute
overtime compensation of the employee but
excluding the cost of meals where the employer customarily furnishes not
more than a single meal per day.
(e) The rate or rates (not less than the rates required by section 6
(a) and (b) of the Act) which may be used under the Act to compute
overtime compensation of the employee but excluding additional payments
in cash or in kind which, if included in the computation of overtime
under the Act, would not increase the total compensation of the employee
by more than 50 cents a week on the average for all overtime weeks (in
excess of the number of hours applicable under section 7(a) of the Act)
in the period for which such additional payments are made.
(f)(1) A rate per hour for each workweek equal to the average hourly
remuneration of the employee for employment during the annual period or
the quarterly period immediately preceding the calendar or fiscal
quarter year in which such workweek ends, provided: (i) It is a fact,
confirmed by proper records of the employer, that the terms, conditions,
and circumstances of employment during such prior period, including
weekly hours of work, work assignments and duties, and the basis of
remuneration for employment, were not significantly different from the
terms, conditions, and circumstances of employment which affect the
employee's regular rates of pay during the current quarter year, or
differ only because of some change in basic salary or similar
nonfluctuating factor for which suitable adjustments have been made in
the calculations to accurately reflect such change and (ii) such average
hourly remuneration during the prior period is computed by the method or
methods authorized in the following paragraphs.
(2) The average hourly remuneration on which the rate authorized in
paragraph (f)(1) of this section is based shall be computed: (i) By
totaling all remuneration for employment during the workweeks ending in
the prior period (including all earnings at hourly or piece rates,
bonuses, commission or other incentive payments, and other forms of
remuneration paid to or on behalf of the employee) except overtime
premiums and other payments excluded from the regular rate pursuant to
provisions of section 7(e) of the Act, and (ii) by dividing the amount
thus obtained by the number of hours worked in such prior period for
which such compensation was paid.
(3) Where it is not practicable for an employer to compute the total
remuneration of an employee for employment in the prior period in time
to determine obligations under the Act for the current quarter year (as
where computation of bonus, commission, or incentive payments cannot be
made immediately at the end of the period), a one month grace period may
be used. If this one month grace period is used, it will be deemed in
compliance with paragraph (f)(1) of this section to use the basic rate
authorized therein for the quarter commencing one month after the next
preceding four-quarter or quarter-year period (whichever length period
is adopted as the base period for the rate determination). Once the
grace period method of computation is adopted it must be used for each
successive quarter.
(52 Stat. 1060, as amended; 29 U.S.C. 201)
[20 FR 5679, Aug. 6, 1955, as amended at 28 FR 11266, Oct. 22, 1963; 31
FR 6769, May 6, 1966]
